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Bar News - April 15, 2011

Legislative Update: SAFE Act Revisions Shelved

Pending SAFE Act Legislation

Capsule descriptions of the relevant bills:

HB247 – exempts from the licensure law persons who negotiate four or fewer residential mortgage loans in a calendar year. Retained by the House Commerce & Consumer Affairs Committee.

HB408 – clarifies as an exemption from the licensing requirement for attorneys and their employees who provide legal services in connection with residential mortgage loans. The bill also modifies the definition of "mortgage loan originator." Retained by the House Commerce & Consumer Affairs Committee.

HB613 – exempts from the licensing requirements for first mortgage bankers and brokers either: "Any person making not more than 4 first mortgage loans within any calendar year with the person’s own funds and for the person’s own investment without an intent to resell such mortgage loans," or "any individual licensed to practice law in this state, when such individual renders services in the course of practice as an attorney at law to any person engaged in the transactions described in RSA 397-A:4, III and III-a." Committee: Inexpedient to legislate.

SB28 – exempts from the licensing requirements for nondepository first mortgage bankers and brokers for persons providing loans for certain seller-financed transactions. Amended version passed the Senate; still in House Commerce & Consumer Affairs Committee.

Efforts to amend troublesome provisions of the NH SAFE Act are foundering in the legislature and at regulatory levels.

Several bills to amend RSA 397-a are stalled at the legislative committee level. The bills create exemptions from state mortgage licensing rules to allow attorneys to represent consumers in mortgage renegotiations and permit seller financing. Several Bar members and representatives of the real estate industry testified in favor of the amendments but the NH House Commerce and Consumer Affairs Committee decided not to act until the federal Housing & Urban Development Department revises its regulations this summer, according to Connie Boyles Lane, chair of the NHBA Real Property Law Section. (The Board of Governors voted to support efforts to revise the NH SAFE Act.)

Lane and section member Carol Brooks met with NH Banking Department officials to persuade them to broaden or clarify the permissible definition of "ancillary representation" to allow foreclosure prevention advocacy, but the department remained firm in its position that it lacks flexibility to alter its position due to the wording of federal regulations.

Rep. Marie Sapienza, a Salem Republican and an attorney, had co-sponsored two bills supported by the NHBA that would provide a categorical exemption from the NH SAFE Act for attorneys. She said efforts to fix the SAFE Act encountered opposition from representatives of the banking and mortgage banking industries who argued that if the state act was found noncompliant with the federal law regulating mortgage originators and brokers, HUD would take over that area of regulation and the consequences of that would further harm the NH housing industry.

Sapienza said that RSA 397-a was written based on rules that HUD issued that did not reflect the legislative intent of the federal SAFE Act. She hopes that action in Washington could redirect the federal housing agency to allow attorney involvement and clear the way for a rewrite of the NH SAFE Act.

Connie Boyles Lane, chair of the Real Property Law Section, who worked with a number of section members and the Board of Governors to remove roadblocks to attorneys’ involvement in foreclosure prevention, said it is frustrating that the situation remains unchanged. She said that in addition to preventing attorneys from assisting distressed homeowners, recovery in the NH real estate market has been hampered by uncertainty over who can offer seller financing.

In a related matter, the NH Banking Department’s enforcement of RSA 397-a against Concord attorney Dan Dargon was upheld in an administrative law proceeding. Lane, in an e-mail to Real Property Law Section members, said that the Banking Department’s interpretation of ancillary representation tracks the federal HUD interpretation in its proposed rules, which is not encouraging for greater attorney involvement in representing consumers facing foreclosure.

"We will continue to pursue these issues on behalf of the Section and NHBA," Lane said. "I suggest that you continue to speak in favor of these bills to accountants, real estate brokers and NH state representatives/senators."

More on the SAFE Act

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